Reuters: The rupee closed weaker on Tuesday, snapping a five-session winning streak, as a bank bought dollars to facilitate equity market outflows, surpassing exporter dollar sales and inward remittances, dealers said.
The rupee, which traded at 155.20 per dollar earlier in the session, closed at 155.75/85 per dollar, compared with Monday’s close of 155.15/20.
The rupee gained 0.4% last week.
“There was (dollar) demand from a foreign bank in the latter part of the day to settle a share transaction. They did not cover the entire position today and we will see the demand tomorrow also,” said a currency dealer.
On 28 March, the Sri Lankan stock market saw the highest net outflow in the last nine years for which data is available, as LOLC Holdings (Private Ltd.) bought a near 30% stake in its subsidiary, Lanka Orix Leasing Company Plc, from ORIX Corp of Japan. Dealers expect pressure on the currency to ease with more inward remittances ahead of the traditional New Year in mid-April.
The currency has recovered and risen 0.7% since it hit a record low of 156.20 per dollar on 16 March. The rupee has weakened 1.43% so far this year after declining 2.5% last year and 3.9% in 2016.
A gradual depreciation in the rupee and higher volatility are expected this year on account of debt repayments by the government, dealers have said.
The International Monetary Fund said on 9 March that Sri Lanka’s economy remained vulnerable to adverse shocks due to its large public debt and low external buffers.
The Government must repay an estimated Rs. 1.97 trillion ($ 12.68 billion) in 2018 - a record - including $ 2.9 billion of foreign loans and a total of $ 5.36 billion in interest.
Foreign investors sold government securities worth a net Rs. 211.7 million in the week ended 21 March, Central Bank data showed.